I think that the best way to get it back to them is during a conversation about the child. You can stop by the house and tell them that you started a new initiative in the group Le'ilui Nishmas the child, such as answering Amen or making brachos out loud. You can show them pictures of the initiative in action, with pictures of the signs you hung up. If applicable, you can also say over a nice story about the kid, or something else about them that was special. Then, as a 'by the way', you can mention that you have the money and you would want to return it, but if they'd rather, you can use it for something that would be le'ilui nishmas the child.
By doing this, you can bring a nechama in some way to the family, who see that the memory of their child is being honored. Although that may be bringing up pain, I doubt that is the wrong thing to do. And then you can take care of the money as a side point, which is doubtful to cause more pain. It's totally different than just calling them up and saying "hey, here's back your money because your kid died."
But again, maybe run this by Daas Torah. BH, I have little personal experience with grieving, so I cannot say what it feels like to be in that situation.